Question: 2 . Consider the mechanism design example discussed in class in which there are two risk - neutral bidders with independent private values uniformly distributed

2. Consider the mechanism design example discussed in class in which there are two risk-neutral bidders with independent private values uniformly distributed on [1,2] and [0,3], respectively. The risk-neutral sellers value from retaining the object is zero. (a) Derive the expected payment functions ei(ti) for i =1,2. Explain. (b) Can you think of an auction whose BNE implements (i.e. finds the same e and p functions as) the optimal direct incentive compatible mechanism? Explain.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!